Incorporating?

elton10 · Jun 10, 2006

Anyone have some opinions/info on incorporating as an LLC? Im a driver not an O/O but Im an independent contractor(filing a 1099). Any tax/liability advantages or disadvantges to it?

RichM · Jun 10, 2006

I have operated as an S Corp for the last 15 years. Lots of tax advantages,one is that you can have your Corp pay and deduct 100% of your medical expenses.Only negative is that if you hire employees you must make that benefit availble to them. There are many other benefits,best to talk to a good tax accountant.

JohnO · Jun 10, 2006

Rich,
With a S Corp can you 1099 any driver you have driving your units?

I spoke to CPA and he suggested you have $35,000 taxable income before considering Incorporating.

Thanks

RichM · Jun 10, 2006

John I think so but he would have to operate through your Corp as a independent contractor with some type of contractual agreement.

vipra · Jun 10, 2006

I talked to my CPA about forming an LLC. It would have saved me some money, but not enough to bother doing all the paperwork and legal stuff necessary, so I decided not to do it.

RichM · Jun 10, 2006

Another advantage of a S Corp is that you can reduce your FICA (SS) contributions. Based on your age and previous earnings this may not be a good thing.
In our S Corp my wife and I are the Shareholders,Board of Directors,the Officers of the corp and finally the employees of the Corp. We pay ourselves a very small salary. This salry is your EARNED income which you must pay your FICA taxes on. We then take a monthly distribution which is considered ORDINARY income similar to bank interest,stock dividends,rental property income etc. This income is taxed but no FICA comes out of it. It is 100% legal but as I said earlier based on your age it might not be a wise thing to do. If you are young with many earning years ahead of you, you probably want to contribute the maximun you can for future S Security benefits.But if you have earned decent bucks in your other occupations and have less then 10 years until you can draw SS benefitis it is something to consider.

There is also the question of personal liability in the event of an accident. It is a grey area,some attorneys will say only the Corp assets can be used in a judgement against you since you are an employee,other attorneys will say that you have a closely held corp and your personal assets may be sized.

Crazynuff · Jun 11, 2006

If you are driving your own truck and are found negligent you can be sued personally as the driver putting your personal assets at risk . Be aware if you form an LLC other states won't recognize it and will require you to file as a foreign LLC .

elton10 · Jun 13, 2006

>There is also the question of personal liability in the
>event of an accident. It is a grey area,some attorneys will
>say only the Corp assets can be used in a judgement against
>you since you are an employee,other attorneys will say that
>you have a closely held corp and your personal assets may be
>sized.

This is my primary concern. I'm driving(co-driving) for a small fleet owner and I'm a little concerned about what, if any, personal liability I might have in the event of an accident. I get a 1099 now.

RichM · Jun 13, 2006

It's a good idea to invest about $200 for a 1 million dollar blanket insurance policy. Especially in expediting where we are usually under the gun to be somewhere at a set time and you are trying to find an address in the rain at 0500.

elton10 · Jun 15, 2006

Rich
Thanks..I was given the same advice by a very knowledgeable person who provides bookeeping and other services exclusively to truckers. She said incorporation wouldnt be cost effective and suggested your solution as a remedy to the liability question